February 12, 2016
The OEM warned that its document division’s revenue “could fall” up to seven percent, while restructuring will cost around $2.4 billion (€2.1 billion).
The Lake Andes Wave reported more details on the OEM’s plan, revealed at the end of January, to split into two separate businesses, one focused on services and the other on hardware. Its so-called Document Technology company would be worth $11 billion (€10.1 billion), while the business process outsourcing company would be worth $7 billion (€6.4 billion).
Xerox said at the time that it intends for the separation to “be complete by the end of 2016”, and for it to “maximise return to shareholders and align with current market dynamics”. A “strategic transformation programme” will also take place for three years in both companies, and this restructuring is what has been expanded upon by the OEM, in a conference call by CEO Ursula Burns.
The OEM earned $4.65 billion (€4.12 billion) during the last quarter, a fall from analyst expectations of $4.73 billion (€4.19 billion), and its share price rose by two percent after the split announcement, with a $2.4 billion restructuring programme now set to take place. This includes a cut in spending of $600 million (€531 million), “on top of earlier cost-cutting efforts”, and Xerox warned that the document division “could fall as much as” seven percent this year before the split.
Burns commented that the split’s “significant actions […] define the next chapter of our company”, and added that afterwards, the two new companies will be “more flexible, more responsive and essentially more fit and focused for the markets that we are attacking”. When asked about management for both companies, Burns “gave no indication whether she would continue leading Xerox”, other than saying her own assessment of her performance was that it had been “solid”.
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